Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Jen · 26 February 2015 at 3:06PM

bustedandbroke wrote: »

Hi
not sure this is posted in the correct place -

I am on the verge of bankruptcy .

I understand that they will be looking at equity in my home , which is mortgaged and in both me and my wifes names. My mother in law has lived with us for about 10 years, in an annexe to our main property ,that she funded herself from the sale of her property .

my question is whether she would have any legal standing or claim on our property when it comes to assessing the equity left in the home ?

Hi there,

Thanks for posting.

Declaring bankruptcy is a big step. Firstly, if you haven’t already, I’d suggest getting some free advice to see if bankruptcy is the best solution for your situation.

We offer a range of debt solutions and it could be that another one is a bit more suited to your situation. Our advisors would be more than happy to chat with you about our solutions and help to create a free, personal action plan that’s based on your budget, income and debts.
You can find out how to contact us here: http://www.stepchange.org/Contactus.aspx
I noticed on another post you mention that your mother in law isn’t on the deeds to the house. Your mother in law may still have a ‘beneficial interest’ in the property because although she isn’t named on the deeds, she has contributed to the capital costs of the property by paying for the annex.

If you decide to go bankrupt, an official receiver (OR) will be appointed to deal with your bankruptcy. When looking over your assets, the OR’s starting point would be that the property ownership matches the deeds, so you and your wife own 50% each. In the bankruptcy, your interest in the property (i.e. 50%) would transfer to the OR who would usually try to release it, often by selling the house.

In the case of a third person (in this case your mother in law) also having a beneficial interest in the property, the OR will probably decide you don’t have an exact 50% share of the equity. However it’s important to remember that it would be down to you and/or your mother in law to prove her beneficial interest to the OR.

Because of the nature of your situation, we would advise you and your mother in law get qualified legal advice before you decide to go ahead with bankruptcy.

As mentioned above, if you haven’t already had debt advice about your options, I’d suggest giving us a call using the link above.

I hope this helps and if you’ve got any more questions you know where we are.

Jen

tmrj1970 · 27 February 2015 at 12:51AM

My partner has paid all his debts under his bankruptcy and the insolvency practitioner has told him to apply for an annulment. Can we do this without a solicitor?
Can you advise us on how we go about requesting an annulment.

Many Thanks

Former_StepChange_Rory · 27 February 2015 at 12:03PM

tmrj1970 wrote: »

My partner has paid all his debts under his bankruptcy and the insolvency practitioner has told him to apply for an annulment. Can we do this without a solicitor?
Can you advise us on how we go about requesting an annulment.

Many Thanks

Hi there,

If your partner is looking to annul their bankruptcy because they can pay or secure all of their debts including the Insolvency Service and any trustee's fees then they should apply to the court which made the bankruptcy order using form 7.1A. You wouldn't usually need a solicitor to do this.

They should include a witness statement to explain what assets and debts they had at the point the bankruptcy order was made and how they will be paying (or how they've paid) or secured the debt including the official receiver's fees.

Your partner must inform the official receiver (OR) and send them a copy of the witness statement, giving at least 28 days notice. The OR will report back to the court to confirm the debts have been paid or secured as agreed.

There's guidance on how to annul a bankruptcy available online should you need any more help with this.

Rory

skiloz · 8 March 2015 at 11:35AM

where do I get the bankruptcy forms from

alastairq · 8 March 2015 at 1:29PM

https://www.gov.uk/government/publications/debtors-bankruptcy-petition-insolvency-form-627

https://www.gov.uk/government/publications/statement-of-affairs-insolvency-form-628

Download, and print off?

annannanna · 10 March 2015 at 10:07AM

Hi, my partner split up with his ex girlfriend about 10 years ago. She had a mortgage on her property and the just before they split up they jointly got a second mortgage and his name went on the deeds.
He has continued to make his loan repayments for the second mortgage directly to her.
This weekend we received a letter from a solicitor chasing my partner for £8000 which is what is due on his exes mortgage. We are waiting to hear about the 2nd mortgage now too.
After some investigation it appears the exs house was repossessed in november and she has been made bankrupt. We have had no communication about this.
I know my partners name is on the deeds so the mortgage lender can now pursue him for her debt. Can you explain does the ex now not have to pay any of her debt as she is bankrupt, is my partner liable for all the debt secured on the property? Will there be any negotiation open to him? Thanks

Former_StepChange_Rory · 10 March 2015 at 10:43AM

annannanna wrote: »

Hi, my partner split up with his ex girlfriend about 10 years ago. She had a mortgage on her property and the just before they split up they jointly got a second mortgage and his name went on the deeds.
He has continued to make his loan repayments for the second mortgage directly to her.
This weekend we received a letter from a solicitor chasing my partner for £8000 which is what is due on his exes mortgage. We are waiting to hear about the 2nd mortgage now too.
After some investigation it appears the exs house was repossessed in november and she has been made bankrupt. We have had no communication about this.
I know my partners name is on the deeds so the mortgage lender can now pursue him for her debt. Can you explain does the ex now not have to pay any of her debt as she is bankrupt, is my partner liable for all the debt secured on the property? Will there be any negotiation open to him? Thanks

Hi there,

Because your partner's name was on the mortgage, there would habe been a joint and several liability to repay the mortgage.

When your partner's ex declared bankruptcy, their liability for the debt ends at the point the bankruptcy order is made and this includes any mortgage shortfalls, secured debts (when the house was repossessed) and unsecured debts.

However, your partner will still be liable for the full amount, as bankruptcy can have the effect of turning joint debts into sole debts.

I realise this could leave you in difficult position, as your partner might now be liable for the full amount of any shortfalls from the property.

If you're not sure how best to deal with these debts or think you'll struggle then we'd be happy to help. As a charity we offer free, impartial debt advice and solutions to anyone struggling to deal with debt.

You can use our free, anonymous Debt Remedy tool to enter details about your finances and the outstanding debt, which we'll use to offer tailored advice and solutions to help you.

I hope this helps,

Rory

jamesd · 10 March 2015 at 11:52AM

annannanna, had he been keeping his mortgage lender up to date with his address and any other contact details?

I'm concerned that his mortgage lender initially appears to have grossly breached the provisions of the Pre-Action Protocol for Possession Claims by not even discussing the matter with their customer.

I suggest that initially he takes legal advice with a view to possibly having the possession order set aside, because it appears to have been based on at a minimum misleading the court that was approached to seek a possession order.

It's also worth asking the solicitor concerned whether completion of the sale has happened and if not, informing them that he may well contest the possession order on the basis of lack of contact and misrepresentation to the court about material facts.

If your partner has the financial means he might consider purchasing the property as an alternative to repossession if the possession order can be reversed. If he doesn't have the means even with a mortgage then there are far fewer possibilities. He should have been given the opportunity top make the mortgage payments at least, but seems not to have been given that opportunity.

A complaint to his mortgage lender about their failure to even contact him, followed up by a complaint to the FOS also appear sensible. At a minimum he should be seeking to have all obligation for the debt removed due to their failure to make anything even remotely resembling a reasonable attempt to discuss the arrears with him.

If he has the means to purchase or pay the arrears he might also seek details of the buyer's solicitor from the lender's solicitor, explaining that he may wish to notify them that the possession order was only obtained by misleading the court and that he may seek to have it reversed.

At the moment it appears that he will now have to declare on all future mortgage applications that he has had a mortgage repossession and this will seriously harm his prospects for getting a mortgage on the best terms, or, in the next few years, at all.

Because this sort of thing is well outside the normal debt work that StepChange does I suggest that you start a topic discussing this in the house buying section where you'll get broader experience to help deal with it. At a minimum, he needs legal advice urgently.

It appears that he's been very badly mistreated by his mortgage lender.

applejack1pie · 12 March 2015 at 7:04PM

Hello
I'm getting in a right panic and I'd be eternally grateful for any advice please.
I have a bankruptcy ending in April 2015 but they require monthly statements of my self employed earnings as a cleaner for 6 months June to December.
The panic I'm having is that I have holiday let cleans as my main income and that period is drastically higher that the other six months they haven't requested!
I need to know if if can take my yearly income and divide it equally or are they going to penilise me for working hard in the summer and saving for the winter?
The difference in the the busy and quiet seasons of income are
June to dec. £3485 and jan to May £1164
So a drastic jump !

Former_StepChange_Rory · 13 March 2015 at 1:25PM

applejack1pie wrote: »

Hello
I'm getting in a right panic and I'd be eternally grateful for any advice please.
I have a bankruptcy ending in April 2015 but they require monthly statements of my self employed earnings as a cleaner for 6 months June to December.
The panic I'm having is that I have holiday let cleans as my main income and that period is drastically higher that the other six months they haven't requested!
I need to know if if can take my yearly income and divide it equally or are they going to penilise me for working hard in the summer and saving for the winter?
The difference in the the busy and quiet seasons of income are
June to dec. £3485 and jan to May £1164
So a drastic jump !

Hi there,

Try not to panic about this, just make sure you provide your accurate, full income details to your official receiver (OR) with your overall average earnings.

It's usually up to you to work these out, but it's unlikely to be anything that the OR hasn't come across before with self-employed income in bankruptcy.

If you have any questions, get in touch with the OR and have a discussion about this, they'll be able to answer any questions you have about this.

Rory

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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